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France and Belgium inject further €5.5bn into Dexia

France and Belgium on Thursday agreed to provide €2.59bn and €2.92bn, respectively, in fresh aid to Dexia, in exchange for preference shares in the struggling bank, marking the lender’s third bailout in four years.

Dexia chief executive Karel De Boeck said that the recapitalisation will leave only almost 6% of the firm’s shares publicly owned and available for trading, compared with nearly 30% in December. In addition to the national governments, Belgian regions and France's state-owned Caisse des Depots et Consignations also hold stakes in Dexia.

The development comes as the bank reported a €1.23bn net loss for the third quarter. Dexia said it needs the fresh capital because of a "significant writedown" on the value of its holding in Dexia Credit Locale, its French arm, and higher funding costs.